FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 25: Taxation of International Transactions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

WaterCo, a domestic corporation, purchases inventory for resale from unrelated distributors outside the U.S. It resells this inventory to U.S. customers, with title passing inside the United States. What is the source of WaterCo's inventory sales income?

A) 100% U.S. source.
B) 100% foreign source.
C) 50% U.S. source and 50% foreign source.
D) 50% foreign source and 50% sourced based on location of manufacturing assets.

E) A) and B)
F) B) and D)

Correct Answer

verified

Show Answer

Question 72

Essay

Review LaterAdd Note

Review Later

Goolsbee, Inc., a U.S. corporation, generates U.S.­source and foreign­source gross income. Goolsbee's assets (tax book value) are as follows. $\begin{array}{lr}\text { Generating U.S.-source income } & \$ 15,000,000 \\\text { Generating foreign-source income } & \underline{25,000,000} \\\text { Total } & \$ 40,000,000 \\\end{array}$ Goolsbee incurs interest expense of $200,000. Using the asset method and the tax book value, apportion interest expense to foreign-source income.

Correct Answer

verified

Using the asset method and the...

View Answer

Show Answer

Question 73

True/False

Review LaterAdd Note

The U.S. system for taxing income earned inside its borders by non-U.S. persons is referred to as inbound taxation because such foreign persons are earning income by coming into the United States.

GoldCo, a U.S. corporation, incorporates its foreign branch in a § 351 exchange, creating GreenCo, a wholly owned foreign corporation. GoldCo transfers $200 in inventory (basis = $50) and $900 in land (basis = $950) to GreenCo. GreenCo uses these assets in carrying on a trade or business outside the U.S. What gain or loss, if any, does GoldCo recognize as a result of this transaction?

Magdala is a citizen of Italy and does not have permanent resident status in the United States. During the last three years she has spent a number of days in the United States. Current year - 120 days First prior year - 150 days Second prior year - 150 days Is Magdala treated as a U.S. resident for the current year?

Winnie, Inc., a U.S. corporation, receives a dividend of $400,000 from a non-CFC foreign corporation. Deemed-paid foreign taxes attributable to the dividend are $120,000. If Winnie elects the FTC, its gross income attributable to this dividend is $400,000.

ForCo, a foreign corporation, receives interest income of $100,000 from USCo, an unrelated domestic corporation. USCo has historically earned 85% of its income from foreign sources. What amount of ForCo's interest income isUS. source?

Wellington, Inc., a U.S. corporation, owns 30% of a CFC that has $50 million of earnings and profits for the current year. Included in that amount is $20 million of Subpart F income. Wellington has been a CFC for the entire year and makes no distributions in the current year. Wellington must include in gross income (before any § 78 gross­up) :

A "U.S. shareholder" for purposes of CFC classification is any U.S. person who owns directly, indirectly, and constructively at least 50% of the voting power of a foreign corporation.

U.S. income tax treaties typically:

Match the definition with the correct term. -U.S. taxpayers earning income outside the United States.

Which of the following is a specific separate income "basket" for purposes of the foreign tax credit limitation Calculation?

Dark, Inc., a U.S. corporation, operates Dunkel, an unincorporated branch manufacturing operation in Germany. Dark reports $100,000 of taxable income from Dunkel on its U.S. tax return, along with $400,000 of taxable income from its U.S. operations. Dark paid $40,000 in German income taxes related to the $100,000 of Dunkel income. Assuming a U.S. tax rate of 35%, what is Dark's U.S. tax liability after any allowable foreign tax credits?

Which of the following statements regarding the taxation of U.S. real property gains recognized by non-U.S. persons not engaged in a U.S. trade or business is false? Gains from the disposition of U.S. real property are:

Describe and diagram the timeline that most businesses use to enter the international markets.

Match the definition with the correct term. Not all of the terms have a match. A definition can be used more than once. -Ownership threshold for U.S. shareholders to be deemed a controlled foreign corporation.

Match the definition with the correct term. -Foreign taxpayers earning income inside the United States.

Yvonne is a citizen of France and does not have permanent resident status in the United States. During the last three years she has spent a number of days in the United States. Current year - 150 days First prior year - 150 days Second prior year - 90 days Is Yvonne treated as a U.S. resident for the current year?

Income tax treaties may provide for either higher or lower withholding tax rates on interest income than the rate provided under U.S. statutory law.

A U.S. business conducts international communications activities between the U.S. and Spain. The resulting income is sourced 100% to the U. S., the residence of the taxpayer.